Applied Materials weak forecast fans concerns over chip boom end

(Reuters) - Applied Materials Inc, the world’s largest supplier of equipment used to make chips, forecast current-quarter profit and revenue below Wall Street estimates, adding to fears that a two-year chip boom may be losing steam.

Applied Materials’ new corporate signage photo in Santa Clara, California, U.S. is shown in this image released on August 22, 2016. Courtesy Applied Materials/Handout via REUTERS/File Photo

Shares of the company, whose results are seen as the bellwether for the chip industry, were down 4 percent at $45.55 in extended trading on Thursday. Rival Lam Research Corp also dropped about 2 percent.

Investors have worried that slowing smartphone growth and newer technologies would prompt chipmakers to rein in capital spending and lower demand for chip-making equipment.

Dickerson said the fourth-quarter forecast assumes a decline of about 4 percent in the company’s semiconductor systems revenue.

Applied Materials expects fourth-quarter adjusted profit of between 92 cents and $1 per share and net sales of between $3.85 billion and $4.15 billion. The midpoint of the revenue range forecast would be about flat from a year earlier, the company said.

Analysts on average were expecting a profit of $1.17 per share and revenue of $4.46 billion, according to Thomson Reuters I/B/E/S.